Best of the Week
Most Popular
1. Next Financial Crisis Is Already Here! John Lewis 99% Profits CRASH - Retail Sector Collapse - Nadeem_Walayat
2.Why Is Apple Giving This Tiny Stock A $900 Million Opportunity? - James Burgess
3.Gold Price Trend Analysis - - Nadeem_Walayatt
4.The Beginning of the End of the Dollar - Richard_Mills
5.Stock Market Trend Forecast Update - - Nadeem_Walayat
6.Hindenburg Omen & Consumer Confidence: More Signs of Stock Market Trouble in 2019 - Troy_Bombardia
7.Precious Metals Sector: It’s 2013 All Over Again - P_Radomski_CFA
8.Central Banks Have Gone Rogue, Putting Us All at Risk - Ellen_Brown
9.Gold Stocks Forced Capitulation - Zeal_LLC
10.The Post Bubble Market Contraction Thesis Receives Validation - Plunger
Last 7 days
The Incredibly Bullish Set-Up for Gold - 20th Oct 18
Here Comes the Stock Market Retest - 20th Oct 18
Waterproof Camera - Olympus Tough TG-5 Setup and First Use - 20th Oct 18
Israel’s 50-Year Time Bomb, Pushing Palestinians to the Edge - 19th Oct 18
Bitcoin Trend Analysis 2018 - 19th Oct 18
History's Worst Stock Market Crash and the Greatest Investing Lesson! - 19th Oct 18
More Signs of a Stocks Bull Market Top and Start of a Bear Market in 2019 - 19th Oct 18
Stock Market Detailed Map Of Expected Price Movement Before The Breakout - 18th Oct 18
Determining the Outlook for Gold Mining Stock - 18th Oct 18
Investor Alert: Is the Trump Agenda in Peril? - 18th Oct 18
Stock Market is Making a Sharp Rally After a Sharp Drop. What’s Next? - 18th Oct 18
Global Warming (Assuming You Believe In It) Does Not Affect Gold - 18th Oct 18
Best Waterproof Compact Camera Olympus Tough TG-5 Review - Unboxing - 18th Oct 18
Silver's Time Is Coming - 17th Oct 18
Stock Market Volatility Breeds Contempt - 17th Oct 18
Gold 7-Year Bear Market Phase Is Over - 17th Oct 18
Gold - A Golden Escape - 17th Oct 18
Tec Stocks Sector Set For A Rebound? - 16th Oct 18
Real Estate Transactions are Becoming Seamless with Blockchain-Powered Data Sets - 16th Oct 18
Important Elements of a Viral Landing Page - 16th Oct 18
Stephen Leeb Predicts 3-Digit Silver and 5 Digit Gold?! - 16th Oct 18
BREXIT, Italy’s Deficit, The EU Summit And Fomcs Minutes In Focus - 16th Oct 18
Is this the Start of a Bear Market for Stocks? - 16th Oct 18
Chinese Economic Prospects Amid US Trade Wars - 16th Oct 18
2019’s Hottest Commodity Is About To Explode - 15th Oct 18
Keep A Proper Perspective About Stock Market Recent Move - 15th Oct 18
Is the Stocks Bull Dead? - 15th Oct 18
Stock Market Bottoms are a Process - 15th Oct 18

Market Oracle FREE Newsletter

Trading Any Market

Natural Gas – Uncovering Trade Potentials

Commodities / Natural Gas Jan 25, 2013 - 11:51 AM GMT

By: Michael_Noonan

Commodities

We like Natural Gas from the long side, ever since the 9 January "double bottom." What was needed was a weak correction, or retest of that day's low, but it never came as price kept rallying higher every day. Last night, while reviewing markets, in general, this chart jumped out for a short-term short position.

The first thing noticed was the wide range bar on Tuesday, second bar from end. The close was weak, just under mid-range the bar, and volume increased. Increased volume on a wide range bar is always worth noting. Turns out, there was also a three day clustering of closes, and all of this occurring at a potential resistance area, noted by the broken horizontal lines where a downside gap formed.


The daily trend is still down, so taking a short position in a down trend makes sense. We knew if there were price weakness during Thursday's trade, it was a reason to go short. All we had to do was monitor intra day activity.

Natural Gas Daily Chart

The best part of following developing market activity is that it eliminates guesswork and the need of following opinion, or gut feel. The market provides opportunities all the time. Incorporating a set of rules for taking action when set-ups like these occur puts us in a decided trading edge opportunity.

All we needed to see was weakness, on increased volume, followed by a weak rally, and the market was saying this potential short is a "go." You can see where the day activity remained under short-term resistance, and a wide range bar lower, with a poor close, on increased volume was the message from the market that we wanted to see, based on a decision made the prior evening.

Distractions being what they are, we missed the weak rally for establishing a better position. Note how volume dropped sharply as price rallied two bars later. Having missed it, we caught the next move down, also on increased volume, for a short position.

Anyone who believes markets are random simply has no clue what developing market activity means. That ignorance forms the basis for making such irrational statements, and that form of ignorance spreads as an acceptable view of how unpredictable "random" events are in the markets. To each their own.

What remains now is managing the trade. a protective buy stop is placed above the high, for anything can happen. We have no clue as to HOW the market will develop from here. Even though we like Natural Gas as a long potential, we remain flexible enough to accept a trade potential opposite of expressed sentiment. Opinions always take a back seat to developing market activity.

A buy order has been placed to cover half the position at 3.420, just in case price reaches that area. It would lock in a profit and reduce risk exposure on the trade. If half the position is filled there, managing the balance has more breathing room.

Of course, we have no clue how the market will develop from here, and price can just as readily reverse and rally. All we know is that the probability of a winning trade is greater than that of losing, and we cannot ask for more.

Natural Gas 20-Minute Chart

By Michael Noonan

http://edgetraderplus.com

Michael Noonan, mn@edgetraderplus.com, is a Chicago-based trader with over 30 years in the business. His sole approach to analysis is derived from developing market pattern behavior, found in the form of Price, Volume, and Time, and it is generated from the best source possible, the market itself.

© 2013 Copyright Michael Noonan - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

Michael Noonan Archive

© 2005-2018 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules